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RANsquawk EU Open Rundown 29.05.17

Asian equities saw an indecisive session amid holiday-thinned conditions while North Korea conducted another missile test

FX markets were also relatively rangebound with the USD-index holding onto Friday’s gains

Looking ahead, highlights include ECB’s Draghi. UK and US markets closed.

**Desk will shut at 1630BST on Monday 29th and reopen at 2200BST for Asia-Pac Coverage on May 29th. (See website for full details)**

  • ASIAAsia equity markets followed on from a similar indecisive US close on Friday, with the region mixed amid holiday thinned trade and after another missile test by North Korea. ASX 200 (-0.5%) was weighed on by financial and IT sectors, while Nikkei 225 (+0.1%) traded choppy alongside currency movements. Heng Seng (+0.1%) index traded range-bound amid a lack of participants with the rest of Greater China away for the Dragon Boat Festival. Finally, 10yr JGBs were mildly lower amid an absence of a BoJ Rinban announcement and after Japanese stocks recovered from opening losses, while this also coincided with pressure observed in T-notes.China Industrial Profits (Apr) Y/Y 14.0% (Prev. 23.8%). (Newswires)EUROPE/UKLatest UK election polls:

    YouGov UK election poll showed Conservatives at 43% vs. Labour at 36% (Prev. 43% vs. 38%). (Newswires)

    ICM UK election poll showed Conservatives at 46% vs. Labour at 32% (Prev. 47% vs. 33%). (Newswires)

    ORB UK election poll showed Conservatives at 44% vs. Labour at 38%. (Newswires)

    FX

    FX markets were subdued amid a lack of drivers and with US, China and UK away for holidays. This kept the greenback uneventful with the USD-index holding onto last Friday’s gains, while JPY-crosses attempted to nurse last week’s slide. Furthermore, GBP/JPY outperformed after recovering from 1-month lows and as GBP/USD found reprieve from the recent losses triggered by a tighter election race, to reclaim the 1.2800 handle.

    South African President Zuma survived a proposal by members of his ruling ANC party to its National Executive Committee to order him to step down. (Newswires)

    COMMODITIES

    Trade across the commodities complex was subdued overnight amid a lack of drivers and with key markets away for holidays. As such, WTI crude futures pulled back from Friday’s gains where it met resistance at the USD 50/bbl level, while gold (-0.1%) was range-bound near 4-week highs amid a flat USD. Elsewhere, copper lacked demand alongside a cautious tone and with its biggest consumer China absent from the market.

    Russian Energy Minister Novak said the OPEC monitoring committee will discuss the possibility of adjusting global oil output cut deal in July. (Newswires)

    US Baker Hughes Rig Count (May) W/W 908 (Prev. 901)

    US Baker Hughes Oil Rig Count (May) 722 (Prev. 720); 19th consecutive increase in oil rigs

    US Baker Hughes Gas Rig Count (May) W/W 185 (Prev. 180)

    GEOPOLITICAL

    North Korea launched a projectile which is said to have involved a scud missile that flew 450km and landed in Japan’s exclusive economic zone. (Newswires)

    US

    US treasuries traded in a tight range – 10y range was just 2.4bps – ahead of the long weekend. An early bid fizzled tspanoughout the day but IFR expect treasuries to remain supported into month-end. Finally, 10y Jun’17 T-note futures settled at 126.07+, up 2 ticks.

    Fed's Williams (Non-Voter, Soft Hawk) stated the Fed will begin sspaninking balance sheet later this year. Williams added US has reached and surpassed full employment and that inflation is moving towards 2% within a year or so. (Newswires)

    US President Trump tweeted that the massive tax cuts/reforms he submitted is moving along the process very well and ahead of schedule, while he also suggested increasing spending for healthcare. (Newswires)

    US President Trump’s son-in-law and advisor Kushner reportedly had undisclosed communication with Russian ambassador Kislyak on at least 3 occasions via telephone calls between April and November last year, according to press reports. Furthermore, there were also reports that Kushner is under pressure to take a leave of absence from the White House and that the US Senate Intelligence Committee has requested all Trump campaign documents since 2015. (Newswires)

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